BRCK Brickability Group Plc

27 February 2024

Brickability Group plc

("Brickability" or the "Group")

Trading Update

Resilient performance; further progress on strategic objectives

Brickability Group plc (AIM: BRCK), the leading construction materials distributor, today provides an update on recent trading and in respect of the financial year ending 31 March 2024 ("FY24").

Trading update

Against a challenging trading backdrop, the Group is continuing to demonstrate its resilience through growing diversification, with good performances in both the Distribution and Contracting Divisions partly offsetting tougher comparators in Bricks and associated building products.

Market volumes for bricks in the UK have been significantly lower in the last twelve months, with UK despatches for the calendar year 2023 approximately 30% lower than 2022. Over the same period, brick imports into the UK are estimated to have fallen by 42%. FY24 Group sales volumes in the Bricks and Importing Divisions reflect these market trends, with FY24 revenues year-to-date at lower levels than in the prior year. Pricing is becoming increasingly competitive given the softer demand.

However, the Distribution Division has traded well despite the slowing of private housebuilding and residential RMI markets, and gross margins have remained strong. Upowa remains well placed to benefit from further regulatory drivers in new build housing and the increasing demand for more sustainable and zero-carbon technology solutions.

The Contracting Division also continues to perform well; the integration of the recent acquisitions of Topek Holdings Limited and TSL Assets Limited is underway, and both companies are experiencing increased levels of enquiries as part of the enlarged Group.

Outlook

The lower levels of demand in Bricks and associated building products experienced year-to-date are likely to persist through to the end of the current financial year, and accordingly, the Group's FY24 adjusted EBITDA is expected to be towards the lower end of current market expectations.¹

Whilst it is encouraging that the rate of inflation is trending down favourably and the widely expected fall in interest rates will benefit the wider market, trading conditions are expected to remain challenging for longer than initially anticipated.

As a result, the Board now considers it appropriate to assume a more conservative profile for the Group's recovery over the next twelve months. The underlying long-term demand for UK housing remains robust, and the Group is well placed to benefit significantly as the market and volumes recover.

Alan Simpson, Chief Executive Officer, said:

"I am extremely pleased with the performance of the Group and of its employees, given the continuing challenging market conditions outside of our control. The short-term factors impacting our businesses are well publicised, however, we are very excited by some of the opportunities we are seeing in the market.

"We continue to make further progress on our strategy, which includes diversifying the Group through differentiated product offerings and acquiring higher margin revenue streams, the benefits of which we are already seeing.  The two recent acquisitions demonstrate our ability to identify and execute quality acquisitions, whilst maintaining a robust balance sheet.

"We have maintained a disciplined approach to cost and cash management during this period, and I am confident the Group is extremely well positioned across each of its divisions to benefit when activity in its end markets recover."

¹ Complied analyst consensus for the Company, prior to this announcement, is for FY24 adjusted EBITDA of £46.2m with a range of £44.8m to £47.2m.

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About Brickability

Brickability is a leading construction materials distributor, serving customers across the UK and Europe for over 37 years through its national and local networks. The Group operates from more than 70 locations across the country with over 700 employees.